Dow Jones Surges Today As European Debt Crisis Fears Subside
Reacting to a European Union instant cash loan for avoiding a European debt crisis, the Dow Jones surged Money. Early Monday, in sharp contrast to late last week, the Dow Jones today rose more than 300 points. The Greek bailout and fear that a European debt crisis could spread like wildfire around the world was enough to send investors running last week. A mass sell-off of blue chip stocks was triggered with fear, panic and high speed trading, and the stock market lost nearly 1,000 points on Thursday.
Dow Jones today and European debt
In contrast to investors fearing the $ 140 billion Greek bailout would trigger a European debt crisis and smother a fledgling global economic recovery, Dow Jones today is showing a significant change since last week’s dive. The Associated Press reports that in recent months Dow Jones was climbing slowly and steadily on news that the economy has been growing three straight quarters and job creation is gaining. But for four straight days last week the stock market dropped as volatility returned to Dow Jones today. Big swings like this were common when the U.S. credit crisis grew in late 2008 and the stock market bottomed out in early 2009, which is why investors are skittish.
Dow Jones and the Greek bailout
As European leaders, despite the Greek bailout, appear incapable of making decisions to keep debt-ridden countries from defaulting, the Dow Jones and stock market around the world have been in turmoil. Moody’s Investors Service reports that Greece may have its credit rating cut to junk within the next four weeks. Greece, at Standard and Poor’s, is already rated junk.
European debt crisis averted?
As the euro dropped to a 14-month low last week and European leaders were finally spurred to act on the European debt crisis, Dow Jones surged. Financial assistance valued at almost $ 950 billion in loan guarantees from the European Union to countries under attack from speculators, such as Portugal, Spain and Greece, was agreed upon by the 16 nations using euro as currency.
U.S. cavalry to the rescue
The U.S. Federal Reserve, along with other central banks, also offered a hand to help keep the European debt crisis from becoming a global financial crisis. The Federal Reserve will begin printing the dollars and exchanging them for euros to provide some liquidity for European money markets and banks, according to the New York Times. In a statement, the Fed said the currency swaps were intended to make it easier for European companies, institutions and governments to borrow dollars when they need them, “and to prevent the spread of strains to other markets and financial centers.”
Stock market jumps back with Euro
Dow Jones numbers grew Monday as the rise in the euro and a drop in the dollar pushed the stock market higher. A weaker dollar shoots up the price of commodities traded in dollars because they become more striking to buyers outside the U.S. U.S. companies that do business overseas also benefit in earnings from a drop in the dollar. U.S. bond prices dropped on Monday as investors returned to stocks. Gold also dropped. Both surged last week as investors ran from risky stocks toward safer assets.
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